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The Virus
The latest virus forecast: The US has had a 12% decline from two weeks earlier, with about 59,000 new cases on Friday, as outbreaks in Michigan, New Jersey, and New York are tapering. Over 40% of people in the US have had at least one dose of a vaccine, though daily vaccinations have fallen below 3 million.
The business impact: The economic rebound is gaining steam, as growth surges for services companies and manufacturers. Forecasters expect the US economy to expand 6.7% this year after adjusting for inflation, with another 3.3% growth predicted for 2022. Consumer goods makers are preparing to raise prices, as the cost of raw materials has increased amid pandemic-related slowdowns and shipping congestion.
Focus on Pay Transparency
Pay transparency is practiced by a fraction of all companies, but the approach—which involves disclosing individual workers’ pay to their colleagues—promises to help narrow gender and racial pay gaps and reduce some of the distraction and contentiousness around salaries.
Many government employees already have their pay published publicly, and workers at some companies have disclosed their salaries on shared spreadsheets in hopes of uncovering pay gaps and empowering individual workers to pursue fair wages. In her recent book Just Work, Kim Scott argues that companies should publish salaries for any position on their website, in order to reduce pay disparities and the impact of bias.
One company that has gone further than most is Buffer, an 85-person San Francisco social media tools company. Buffer, which adopted pay transparency in 2013, publishes online the formula it uses for salaries and, unusually for a private company, makes all individual workers’ salaries public as well.
To better understand the advantages and disadvantages of pay transparency, how Buffer has tweaked its approach over time, and how pandemic-related changes to work have impacted it, I recently spoke with Caryn Hubbard, the company’s vice president of finance and a central player in Buffer’s approach to compensation. Here are some best practices and other takeaways:
The salary formula weighs a number of factors. Buffer looks up what other companies pay for a given job title using salary survey data from Radford, identifying what the 50th percentile of pay is for the position when it’s based in San Francisco. It assigns the employee to a level from one (entry level) to nine (c-suite), based on their experience and the scope of their responsibilities, and includes that in the compensation formula. It then factors in cost of living where an employee is located, with four bands weighted from 75% to 100%. “The formula today is the most basic that it's been over the past several years,” says Hubbard. “We set out to simplify, simplify, simplify.”
Hubbard says that Buffer sticks to the formula amount, even if it means the company loses a job candidate or employee to a higher offer elsewhere. It does offer other compensation, including stock-based awards, that it calculates using formulas and discloses internally but not as part of the numbers released publicly.
Buffer hopes to eliminate the location-based component of compensation. The company calculates that it would cost $1.2 million annually to increase salaries for employees in areas with lower costs of living to what it pays in the most expensive regions, and intends to gradually make that shift. Buffer operated remotely even prior to the pandemic, but the broader shift to remote work during the pandemic has highlighted for it how geographic considerations for salaries no longer fully make sense. “You can't have a cost of living factor for an executive role when they could work remote pretty much for any company,” says Hubbard. “So it has been limiting.”
Buffer tries to incentivize performance using what it calls steps. For any of the nine job levels, there are four “steps,” which employees advance along based on their achievements in their roles. After the fourth step, they move up a level. “It's a little bit over-engineered,” says Hubbard. “But people do have that sense of progression and striving towards achieving certain things, knowing they'll see the financial reward.”
Pay transparency improves the culture of an organization, says Hubbard. “We're able to minimize many of the emotional parts of salary negotiation, because secrecy is eliminated,” she explains. “You're not going into these conversations with a manager feeling like you have to prove your worth and your value and negotiate.”
Buffer says it has no gender wage gap for people with equivalent roles and experience, since compensation is determined by formula. But the average salary for women is 5.5% lower than that for men, because of men in more senior positions. That unadjusted gap was over 15% in 2019, and Buffer says pay transparency has been critical to narrowing it by bringing attention and accountability.
Could any company theoretically shift to pay transparency? Hubbard believes the answer is yes. “The first step, though, is you've got to get the buy-in from your people and have real conversations to talk about the discomfort,” she says. “Talk about the benefits, talk about wage gaps. It's a lot of internal communication work leading up to doing that, but it's possible.” And she argues that shifting to pay transparency is worth it: “It's a high-impact shift you can make within your culture.”
What is it like to have your salary published online? Hubbard acknowledges some reticence about having individuals’ pay out there publicly, saying “not everyone wants their friends to know their salaries.” A startup cofounder once told her “I know I can't afford you because I know what you make.”
Discussion about compensation doesn’t go away. “It's not perfect,” acknowledges Hubbard. “It can introduce the human behavior of comparison and judgment about why someone is achieving more—how are they being measured? Why are they in that role? Why are they making more; Why were they leveled up, and not me?” She continues: “Some of those sidebar conversations and concerns that can exist in any company culture, they don't go away with salary transparency. There's still a level of competition for those who place so much value on title or compensation.”
My own experience is that the startup where I was formerly co-CEO was acquired by a Japanese company that had pay transparency. But we decided against shifting to that approach because our staff didn’t have any expectation that their compensation would be shared. As we begin hiring for Reset Work, my colleagues and I are discussing whether to implement pay transparency. I’d welcome any suggestions or views on this question: you can hit reply to this email to share them with me.
Content from our partner McKinsey & Company
Lights, camera, action on diversity. Hollywood's awards season is wrapping up. But even as film and TV have made strides to bolster diversity, there’s opportunity for the entertainment industry to realize an additional $10 billion in annual revenue by fully addressing persistent racial inequities. Find out how in a recent report.
What Else You Need to Know
What if business leaders are facing something besides languishing and temporary burnout among their workforces? Perhaps a wave of workers—especially younger generations—are disillusioned enough by the experience of working corporate jobs over the past year, some emboldened by growing investment portfolios, and stir crazy from pandemic confinement to ditch their career employment in favor of travel and less traditional work.
- Kevin Roose of The New York Times calls it the “YOLO economy,” citing “exhausted type-A” millennials who are preparing to ditch their stable jobs to start businesses, take on gig work, or indulge creative projects. (YOLO means “you only live once.”)
- NYU’s Scott Galloway believes Americans under age 40 are fed up, with much less economic security than their parents, fewer prospects to improve their lot, and a fair dose of boredom from the past year. With little to lose, they’re embracing volatility and creative destruction in stock markets, cryptocurrencies—and potentially also jobs.
- Anne Helen Petersen writes about the “Capitalism is broken economy,” where workers are quitting jobs or foregoing work opportunities because they’re demoralized after the past year of overwork and/or underpay.
- HSBC contractor Jonathan Frostick’s viral post about how his first thoughts upon having a heart attack related to his professional responsibilities–and his vow to increase his work/life balance, purpose, and time with family—is an example of the “great rethinking” underway.
- Dror Poleg calls it “the TINA economy.” (TINA stands for “there is no alternative to risk assets.”) Poleg writes: “Why would you sacrifice your best years for a corporate job if that job is not likely to be there in five—let alone 10—years? Why put your money on safe assets when they are guaranteed to diminish your purchasing power? Why would you trust the government to catch you if you fall when the government cannot fulfill its own basic functions even while you’re still on your feet?”
Whatever you call it, it seems that there’s rethinking of their relationship to work among younger workers especially that extra days off, free subscriptions to meditation apps, and one-off cash bonuses probably won’t eradicate.
Carbon emissions are quickly rising again. The International Energy Agency estimates net emissions dropped 1.9 billion tons last year as the pandemic slowed economic activity and projects that they will rise 1.5 billion tons this year.
Businesses publicly responded to the Derek Chauvin guilty verdict. Some experts said the best approaches were the ones like Target’s that directly addressed Black employees. (You can see a roundup of statements here.)
- Kanarys chief executive Mandy Price suggested that non-Black managers tell Black staff, “I can’t fully understand what you must be going through right now, but I want to be here for you. Here is what’s available to help,” and provide a list of any resources such as mental-health services offered by the company.
It’s official: back-to-back meetings are stressful and exhausting. Microsoft researchers found that short breaks between meetings—particularly when used for activities like meditating, reading, or doodling—helped improve focus and reduce stress. Microsoft is now letting companies set shorter meeting times as the default for employees who use its calendar services (for example, 50 minutes rather than 60 minutes) to encourage breaks.
Return to workplace speed round:
- General Motors’ summed up its strategy for returning in two words: “Work appropriately.” Executives described it as a flexible, evolving policy that could mean different things for an employee each week, depending on their role and the work they need to do. It echoes GM’s “Dress appropriately” policy, which CEO Mary Barra instituted in place of a 10-page dress code when she was heading human resources.
- Lloyds Banking Group in the UK is looking into letting staff work from extra space in its bank branches when that’s more convenient to them.
- Over 30 colleges and universities will require students to be fully vaccinated in order to return to campus in the fall.
- Venture capitalist Fred Wilson is advising startups to look for short-term, inexpensive leases to buy time to figure things out. He recommends perks such as free food to encourage employees to come to the office.
- Law firm Davis Polk & Wardwell has designated two days next month as a “Spring Back to the Office” program for its New York staff, providing a $40 stipend for meals near the office on those days to entice workers back.
- The leadership team at HSBC has given up its individual offices in favor of an open-plan setup with no designated desks. “Having spent more than a year working from home, the last thing I want is to be stuck in an individual office when I return to the building,” wrote bank group chief executive Noel Quinn.
Here are some of the best tips and insights from the past week for managing yourself and your team:
- Move up the exit interview. An estimated roughly 40% of workers are considering switching jobs when conditions stabilize. Rather than wait for staff to leave, schedule one-on-one interviews with them and think of it as re-recruiting them to stick around.
- Schedule a “little Saturday” break each week. Adopt the Swedish practice of lillördag, a Wednesday night break like a drink with a friend or movie, to release stress and lift your mood midway through the work week.
- Create a winnable game. Workers are more engaged if they feel like they’re winning at something that matters. Get your team to set a measurable objective to be completed in a specified timeframe so that everyone can rally around it and feel good when it’s checked off.
- Embrace office gossip. Banter about colleagues has largely been missing over the past year, but experts say it serves a useful function when engaged in with kindness and discretion. Gossip can foster interpersonal intimacy and provide stress relief.
- Send LinkedIn messages on Mondays. Response rates are higher for messages you send on the professional networking platform at the beginning of the week. Avoid Saturdays, when response rates are 13% lower.
Coda
Rise and email! Thirty-one percent of remote workers aged 40 or below check their email within 60 seconds of waking up, according to a new survey. A more modest 19% of those over 40 check their email so speedily in the morning.
The future belongs to ambiverts. Research suggests that individuals who can shift between introverted and extroverted behaviors make better leaders.
- McGill’s Karl Moore estimates that 20% of top executives are ambiverts, with the other 80% divided evenly between introverts and extroverts.
- Moore believes that the pandemic heightened the value of an ambivert style, requiring leaders both to listen more and to rally colleagues with their enthusiasm.
Toilet paper sales are going down the drain. Kimberly-Clark said it was surprised by how abruptly Americans stopped buying toilet paper, after hoarding it last year. Toilet paper sales in the US topped $11 billion in 2020, while the year’s sales could be less than $9 billion.
The handbook for this new era of business doesn’t exist. We’re all drafting our own as we go along—and now we’d like to start doing so together. You can sign up here to receive this briefing by email.